💸 How to Save for a Down Payment

Buying a home is exciting—but figuring out how much you need for a down payment (and how to actually save it) can feel overwhelming. If you’re a first-time buyer in Saskatchewan or thinking about entering the market soon, this guide will break everything down in a simple, practical way.

Let’s take the guesswork out of your savings plan so you can get into your first home sooner. 🏡✨

🏠 What Is a Down Payment?

Your down payment is the upfront amount you contribute when buying a home. The rest is financed through a mortgage from a bank or lender.

💡 Why It Matters:

• It affects your monthly mortgage payment

• It can improve your interest rate

• It influences whether you need mortgage insurance

• It increases your equity from day one

A strong down payment sets the foundation for long-term financial confidence.

📊 How Much Do You Need in Canada?

Here’s what’s required based on the home’s price:

• 5% down for homes up to $500,000

• 10% down for the portion between $500,000–$1,499,999

• 20% down for homes $1.5M+, or to avoid CMHC mortgage insurance

💬 Examples:

• A $400,000 home → $20,000 minimum (5%)

• A $600,000 home → $35,000 minimum ($25K on first $500K + $10K on the remainder)

📌 Pro Tip:
Any down payment under 20% requires CMHC insurance, which adds to your mortgage amount—but also allows you to buy years sooner.

💰 How Your Down Payment Affects Your Mortgage

Both 5% down and 20% down come with their own advantages. The key is choosing the path that aligns with your goals and timeline.

📉 Benefits of a Larger Down Payment (20% or More)

• Lower monthly mortgage payments

• No CMHC insurance premiums added

• Better interest rates in many cases

• More equity from day one

• Overall lower lifetime cost of borrowing

🚀 Benefits of Buying Sooner With 5% Down

This part often gets overlooked, but it’s massive:

• You start building equity sooner instead of watching prices rise

• You avoid being priced out of the market during rising markets

• You lock in a home at today’s prices instead of tomorrow’s

• You gain stability and stop paying rent

• You begin reaping appreciation immediately

For many buyers, waiting years to save 20% actually ends up costing more.

🔍 A Realistic Comparison: Buying With 5% vs. 20% Down

Let’s look at what this might actually look like for a $400,000 home.

Scenario 1: Buying Now With 5% Down

• Down payment: $20,000

• Base mortgage: $380,000

• CMHC insurance (~4%): ~$15,200

• Total mortgage: ~ $395,200

Pros of this path:

• You own a home now

• You start building equity immediately

• You benefit sooner from any market appreciation

• You avoid inflation and rising rents

• Your savings grow through the property instead of sitting in a bank

Scenario 2: Waiting to Save 20%

• Down payment goal: $80,000

• Total mortgage (no CMHC): $320,000

Pros of this path:

• Lower monthly payments

• No CMHC insurance

• Lower total interest paid

• Bigger equity starting point

Potential drawback:
It could take years to save the additional $60,000 — and if prices rise, the gap widens, making the 20% target even harder to reach.

📌 Big Picture: Which Option Is Better?

5% down is best when:

• You want to get into the market sooner

• Prices or rents are rising

• You’re tired of paying someone else’s mortgage

• You need stability or want to start building equity faster

20% down is best when:

• You can save it reasonably quickly

• You prioritize lower monthly payments

• You want the absolute lowest borrowing costs

There is no wrong answer — just the answer that fits your timeline and financial goals.

💡 Smart Ways to Save for Your Down Payment

Whether your target is 5%, 10%, or 20%, these strategies will get you there faster:

1. 🏦 RRSP Home Buyers’ Plan (HBP)

Withdraw up to $35,000 tax-free from your RRSP to boost your down payment.

2. 📈 First Home Savings Account (FHSA)

Save up to $8,000 per year, up to $40,000 total, with tax-free growth.
One of the best tools available for first-time buyers.

3. 💼 Earn Extra Income

Extra cash accelerates your timeline:

• Pick up overtime

• Freelance

• Rent out a room

• Drive Uber or skip deliveries

Putting 100% of side-hustle income into savings makes a massive difference.

4. 🎁 Government Incentives

Programs like the First-Time Home Buyer Incentive can reduce upfront costs.

5. ✂️ Automate & Cut Back

Simple adjustments stack up:

• Cancel subscriptions

• Reduce takeout

• Automate weekly deposits

📌 Pro Tip:
Create a separate down payment savings account to avoid spending it accidentally.

🚨 Common Down Payment Mistakes

Avoid these to stay on track:

❌ Forgetting about closing costs
Expect 3–5% extra for legal fees, inspections, and moving.

❌ Emptying all your savings
Always keep a small emergency buffer.

❌ Waiting too long to save
This can cost you more than CMHC premiums in the long run.

❌ Skipping pre-approval
A pre-approval gives you a clear target and prevents wasted time.

✅ Final Thoughts: Your Path to Homeownership Starts Here

Saving for a down payment doesn’t have to feel overwhelming. Whether you buy with 5% down or wait for a larger amount, the key is having a clear plan — and having a professional in your corner to guide you.

If you want help mapping out your buying strategy or figuring out which option makes the most sense for your situation, I’m here to make the process simple and stress-free.

📞 Call or text me at (639) 295-4696
📩 tanner@twrealestate.ca
🌐 twrealestate.ca

Let’s build a down payment strategy that fits your budget, your goals, and your timeline — and get you into your future home confidently. 🏡💪